U.S. patent number 7,584,126 [Application Number 10/642,769] was granted by the patent office on 2009-09-01 for system and method for managing dedicated use of a credit account.
This patent grant is currently assigned to Capital One Financial Corporation. Invention is credited to Robert D. White.
United States Patent |
7,584,126 |
White |
September 1, 2009 |
System and method for managing dedicated use of a credit
account
Abstract
A method of managing dedicated use of a credit account is
provided. The method includes receiving information regarding a
credit account, associating the credit account with a usage
program, where the usage program includes terms of dedicated use
and where the terms of dedicated use are associated with providing
benefits to the customer in return for dedicated use of the credit
account, providing a benefit to the customer according to the
terms, monitoring credit activity corresponding to the credit
account, and maintaining the benefit if the monitored credit
activity satisfies the terms of dedicated use.
Inventors: |
White; Robert D. (Midlothian,
VA) |
Assignee: |
Capital One Financial
Corporation (McLean, VA)
|
Family
ID: |
41009251 |
Appl.
No.: |
10/642,769 |
Filed: |
August 18, 2003 |
Current U.S.
Class: |
705/35; 705/39;
705/40 |
Current CPC
Class: |
G06Q
20/10 (20130101); G06Q 20/102 (20130101); G06Q
40/00 (20130101); G06Q 40/02 (20130101) |
Current International
Class: |
G06Q
40/00 (20060101) |
Field of
Search: |
;705/35,39,40
;235/487 |
References Cited
[Referenced By]
U.S. Patent Documents
Other References
Caroline E. Mayer, Read 'em and Weep; Cardholders see Rates Rise
based on Other Debts, Dec. 20, 2001, The Washington Post, Final
Edition, p. E.01. cited by examiner .
Cardozo, Wood v. Lucy Lady Duff-Gordon, Dec. 4, 1917, NY Reporter
or NE West reporter, 222 NY or 118 NE, 88-92 or 214-217. cited by
examiner .
Unknown, Richardson, Mar. 14, 2002, Milwaukee Journal Sentinel, p.
7 C. cited by examiner .
Nancy Paradis, Account closing causes commotion, May 3, 1999, St.
Petersburg Times, p. 2 D. cited by examiner.
|
Primary Examiner: Trammell; James P
Assistant Examiner: Trotter; Scott S
Attorney, Agent or Firm: Hunton & Williams LLP
Claims
What is claimed is:
1. A method for managing dedicated use of a credit account,
comprising: receiving information regarding a credit account, the
credit account associated with a customer; associating the credit
account with a usage program, the usage program comprising one or
more terms of dedicated use, the terms of dedicated use associated
with providing a benefit to the customer in return for dedicated
use of the credit account, the dedicated use of the credit account
comprising a predetermined level of usage of the credit account by
the customer in relation to one or more other credit accounts
associated with the customer; providing the benefit to the customer
according to the terms of dedicated use; using one or more computer
processors, monitoring over a period of time credit activity
corresponding to the credit account and activity corresponding to
the one or more other credit accounts to determine if the monitored
credit activity satisfies the terms of dedicated use; and
maintaining the benefit if the monitored credit activity satisfies
the terms of dedicated use.
2. The method of claim 1, further comprising penalizing the
customer if the monitored credit activity does not satisfy the
terms of dedicated use.
3. The method of claim 1, wherein the dedicated use of the credit
account further comprises exclusive use of the credit account
rather than the one or more other credit accounts over the period
of time.
4. The method of claim 1, wherein associating the credit account
with a usage program further comprises: offering the customer
participation in the usage program; and receiving an acceptance of
the offer from the customer.
5. The method of claim 1, wherein: the credit account is associated
with an interest rate; and providing the benefit to the customer
according to the terms further comprises lowering the interest
rate.
6. The method of claim 1, wherein providing the benefit to the
customer according to the terms of dedicated use further comprises:
determining an original usage level associated with the credit
account; identifying the benefit from a plurality of benefit
options, the benefit associated with the original usage level; and
providing the identified benefit.
7. The method of claim 1, wherein monitoring credit activity
corresponding to the credit account further comprises monitoring a
credit report corresponding to the customer, the credit report
comprising information associating the credit activity of the
credit account with the customer.
8. The method of claim 2, wherein penalizing the customer if the
monitored credit activity does not satisfy the terms of dedicated
use further comprises charging a penalty fee to the customer.
9. The method of claim 1, wherein maintaining the benefit if the
monitored credit activity satisfies the terms of dedicated use
comprises: determining an account usage level associated with the
credit account based on the monitored credit activity; and
maintaining the benefit if the account usage level is greater than
or equal to the predetermined level of usage.
10. A method for providing a dedicated credit account, comprising:
providing a credit card customer with a credit account; using one
or more computer processors, associating the credit account with a
usage program, the usage program comprising one or more terms of
dedicated use, the terms of dedicated use associated with providing
a benefit to the customer in return for dedicated use of the credit
account, the dedicated use of the credit account comprising a
predetermined level of usage of the credit account by the customer
in relation to one or more other credit accounts associated with
the customer; and providing the benefit to the customer if, over a
period of time, monitored credit activity corresponding to the
credit account satisfies the terms of dedicated use, wherein
activity corresponding to the one or more other credit accounts is
monitored.
11. The method of claim 10, wherein the dedicated use of the credit
account further comprises exclusive use of the credit account
rather than the one or more other credit accounts over the period
of time.
12. The method of claim 10, wherein: the credit account is
associated with an interest rate; and providing the benefit to the
customer further comprises lowering the interest rate.
13. The method of claim 10, wherein providing the benefit to the
customer if the monitored credit activity associated with the
credit account satisfies the terms of dedicated use further
comprises: determining an account usage level associated with the
credit account; identifying the benefit from a plurality of benefit
options, the benefit associated with the account usage level; and
providing the identified benefit.
14. The method of claim 10, wherein providing the benefit to the
customer if the monitored credit activity associated with the
credit account satisfies the terms of dedicated use comprises:
determining an account usage level associated with the credit
account; and providing the benefit if the account usage level is
greater than or equal to the predetermined level of usage.
Description
TECHNICAL FIELD OF THE INVENTION
This invention relates in general to credit accounts and more
particularly to a system and method for offering dedicated use of a
credit account.
BACKGROUND OF THE INVENTION
A credit card issuer, such as a bank or other financial
institution, generally provides credit accounts to customers, or
cardholders, that allow the customers to make purchases on credit
rather than using cash. Customers incur debt with each credit card
purchase, which may be repaid over time according to the terms and
conditions of the particular customer's credit account. In many
circumstances, a customer may obtain several credit accounts, each
credit account issued by a different credit card issuer.
SUMMARY OF THE INVENTION
In accordance with the present invention, systems and methods for
offering a dedicated use credit account are provided. In general, a
credit card issuer may provide a customer with a credit account
that offers benefits to the customer in return for dedicated use of
the credit account. The customer may participate in a loyalty
program or other similar program in which a customer's credit
account is established as an exclusive use credit account. The
customer may receive benefits in return for exclusive use of the
credit account. In some embodiment, the exclusive use credit
account may be associated with a backup credit account that may be
used if the exclusive use credit account is not available, or if
joint customers of a credit account wish to accrue benefits under
the program. In particular embodiments, the credit card issuer
determines the benefits according to a customer level of usage,
which the credit card issuer monitors using a credit report
corresponding to the customer.
According to one embodiment, a method for managing dedicated use of
a credit account is provided. The method includes receiving
information regarding a credit account, associating the credit
account with a usage program, where the usage program includes
terms of dedicated use and where the terms of dedicated use are
associated with providing benefits to the customer in return for
dedicated use of the credit account, providing a benefit to the
customer according to the terms, monitoring credit activity
corresponding to the credit account, and maintaining the benefit if
the monitored credit activity satisfies the terms of dedicated
use.
Various embodiments of the present invention may benefit from
numerous advantages. It should be noted that one or more
embodiments may benefit from some, none, or all of the advantages
discussed below.
One advantage of the invention may be that exclusive use of a
credit account may increase the number of credit transactions for a
credit account. A customer's exclusive use of a credit card may
allow the credit card issuer to increase the volume of business
transacted with vendors. The customer's outstanding balance owed
may also increase.
Another advantage may be that in return for exclusive use of a
credit account, the customer may earn benefits that allow for
reduction of costs associated with having a credit account.
Additionally, a customer may benefit by reducing the maintenance
and record-keeping expenses of using and carrying various credit
cards.
Yet another advantage may be that by monitoring the use of the
credit account usage, a credit card issuer may be able to more
closely manage the risk associated with a customer. This may result
in increasing the credit limit of a credit account for a customer
with a strong history.
Other advantages will be readily apparent to one having ordinary
skill in the art from the following figures, descriptions, and
claims.
BRIEF DESCRIPTION OF THE DRAWINGS
For a more complete understanding of the present invention and for
further features and advantages, reference is now made to the
following description, taken in conjunction with the accompanying
drawings, in which:
FIG. 1 is a block diagram illustrating an example of a system for
handling credit accounts;
FIG. 2 is a block diagram illustrating an example of a system for
handling transactions in which payments are made using a credit
account;
FIG. 3 is a block diagram illustrating an example of a credit card
issuer in accordance with an embodiment of the present invention;
and
FIG. 4 illustrates a method of managing dedicated use of a credit
account in accordance with an embodiment of the present
invention.
DETAILED DESCRIPTION OF THE DRAWINGS
Example embodiments of the present invention and their advantages
are best understood by referring now to FIGS. 1 through 4 of the
drawings, in which like numerals refer to like parts.
In general, a credit card issuer may provide a customer with a
credit account that offers benefits to the customer in return for
dedicated use of the credit account. The customer may participate
in a loyalty program or any other similar program in which a
customer's credit account is established as an exclusive use credit
account. The customer may accrue benefits in return for exclusive
use of the credit account. In some embodiment, the exclusive use
credit account may be associated with a backup credit account that
may be used if the exclusive use credit account is not available,
or if joint customers of a credit account wish to accrue benefits
under the program. In particular embodiments, the credit card
issuer determines the benefits accrued according to a customer
level of usage, which the credit card issuer monitors using a
credit report corresponding to the customer.
FIG. 1 illustrates an example system 10 for handling credit
accounts. System 10 may include a credit card issuer 12, one or
more customers 14, and one or more credit bureaus 16, which may be
coupled to each other by a communications network 18. Credit card
issuer 12 and customers 14 may communicate with each other using
communications network 18 to transfer credit account information.
For example, a customer 14 may contact credit card issuer 12 using
communications network 18 to open a credit account, make inquiries
or requests regarding a credit account, make payments to credit
card issuer 12, or close a credit account. Credit card issuer 12
may similarly contact customer 14 to offer a credit account to
customer 14, to offer benefits in exchange for participating in
loyalty programs, make inquiries regarding recent charges posted to
a credit account, or remind customer 14 of payments that are
due.
Although credit card issuer 12 and customers 14 are described as
communicating with each other using communications network 18, the
present invention contemplates any suitable form of communication
between credit card issuer 12 and customers 14. For example,
customer 14 may contact credit card issuer 12 by telephone or by
mail to make inquiries or requests regarding a credit account or to
make a payment to credit card issuer 12. Similarly, credit card
issuer 12 may contact customer 14 by mail or telephone to offer a
credit account to customer 14 or to offer benefits to a customer in
exchange for participation in a loyalty program. Credit card issuer
12 may communicate with credit bureau 16 using communications
network 18 to obtain credit information regarding customers 14, as
described in more detail below.
A customer 14, or cardholder 14, may comprise an individual, a
group of individuals, a business organization, or any other
suitable entity to which credit card issuer 12 may issue one or
more credit accounts and provide one or more lines of credit. A
credit bureau 16 may provide credit information regarding customers
14 to credit card issuer 12. Credit information may include credit
history information, payment information, personal information
regarding occupation, income, home ownership, any other suitable
information, or any combination of the preceding. As an example
only and not by way of limitation, a credit bureau 16 may comprise
TRANS UNION, EQUIFAX, EXPERIAN, or any other suitable credit
bureau. Communications network 18 may, in particular embodiments,
comprise some or all of a public switched telephone network (PSTN),
a public or private data network, the Internet, a wireline or
wireless network, a local, regional, or global communication
network, an enterprise intranet, other suitable communication link,
or any combination of the preceding.
Credit card issuer 12 may include any entity suitable to provide
customer 14 a credit account that may incur benefits for customer
14 in exchange for dedicated use of the credit account. According
to one embodiment, the credit card issuer 12 may offer the customer
participation in a loyalty program that allows the customer to
receive benefits in return for exclusive use of the credit account.
The terms of the loyalty program may describe the benefits and the
conditions of exclusivity of use. For example, an exclusive use
credit account may incur benefits if the credit account is the sole
credit account the customer uses to make credit purchases. Credit
card issuer 12 may periodically monitor credit information
corresponding to customer 14 to ensure that the credit activity of
customer 14 satisfies the exclusive use terms of the loyalty
program. In one embodiment, credit card issuer 12 may discontinue
the benefits if the credit information shows credit activity where
customer 14 has failed to use the credit account exclusively for
the benefit of the credit card issuer 12. In another embodiment,
credit card issuer 12 may, upon a customer's failure to meet the
terms of the loyalty program, terminate the credit account,
disassociate customer 14 from the loyalty program, discontinue the
benefits provided, charge a penalty fee, or take other suitable
action.
As an example only and not by way of limitation, credit card issuer
12 may in particular embodiments include a merchant, a bank, a
credit union, or other commercial or financial institution. Credit
card issuer 12 may issue any suitable credit card for a credit
account. As an example and not by way of limitation, credit card
issuer 12 may issue one or more MASTERCARD, VISA, DISCOVER, DINERS
CLUB, JCB or other suitable credit cards, or any combination of the
preceding.
Although credit cards are particularly described, the present
invention contemplates credit accounts that do not have associated
credit cards. For example, credit card issuer 12 may open a credit
account for a customer 14 having an associated credit account
identifier but no associated credit card. In particular
embodiments, a credit line associated with a credit account may
have an associated credit line identifier. Customer 14 may then
purchase goods or services on credit using the associated credit
account identifier or credit line identifier. Reference to "credit
cards" or "credit card accounts" may, where appropriate, encompass
such credit accounts. Although purchases are described, the present
invention contemplates any suitable transactions, for which
payments may be made using credit accounts. For example, a customer
14 may use a credit account to rent one or more items.
Credit card issuer 12 may handle credit accounts, which may involve
opening credit accounts for customers 14, monitoring credit
accounts, billing customers 14, receiving and handling inquiries
and requests from customers 14, evaluating the performance of
customers 14, penalizing customers 14 for payment defaults,
upgrading credit accounts, and closing credit accounts. In
particular embodiments, as described more fully below, opening a
credit account for a customer 14 may include establishing one or
more lines of credit according to credit information from credit
bureau 16 regarding customer 14, information obtained from customer
14 directly, one or more evaluations of payments received from
customer 14, or other suitable information, establishing one or
more terms of a credit account agreement between credit card issuer
12 and customer 14, and activating one or more services which
credit card issuer 12 may provide to customer 14 in connection with
the credit account.
Modifications, additions, or omissions may be made to system 10
without departing from the scope of the invention. For example,
system 10 may have more, fewer, or other modules. Moreover, the
operations of system 10 may be performed by more, fewer, or other
modules. Additionally, functions may be performed using any
suitable logic comprising software, hardware, other logic, or any
suitable combination of the preceding.
FIG. 2 illustrates an example system 20 for handling transactions
for which payments are made using credit accounts. System 20 may
include credit card issuer 12 and one or more merchants 22, which
may be coupled to each other by communications network 18. A
merchant 22 may include any suitable entity that sells goods or
services to customers 14, and may include a single entity such as
an individual store or a number of entities such as a chain of
stores. Merchant 22 may include a seller or distributor that sells
goods produced by one or more otherwise unaffiliated producers. In
addition or as an alternative, merchant 22 may include a producer
that sells one or more goods it produces directly to customers 14,
bypassing distributors. Merchant 22 may include one or more outlets
at one or more physical locations and may, in addition or as an
alternative, include one or more call centers that receive phone
orders from customers 14, one or more websites or other virtual
locations that receive electronic orders from customers 14, or one
or more warehouses that fill orders received from customers 14, or
any combination of the preceding.
Communications network 18 supporting communication between credit
card issuer 12 and merchant 22 may include, as described above,
comprise some or all of a public switched telephone network (PSTN),
a public or private data network, the Internet, a wireline or
wireless network, a local, regional, or global communication
network, an enterprise intranet, other suitable communication link,
or any combination of the preceding. Communications network 18 may,
where appropriate, include one or more private networks used
exclusively for communication between credit card issuer 12 and one
or more particular merchants 22. For example, credit card issuer 12
may provide lines of credit to customers 14 to purchase items only
at one or more particular merchants 22. Although credit card issuer
12 and merchants 22 are described as separate entities, in
particular embodiments, credit card issuer 12 and one or more
merchants 22 may be part of a single organization. For example,
credit card issuer 12 may include one or more merchants 22, or one
or more merchants 22 may include credit card issuer 12.
A customer 14 may purchase goods or services from a merchant 22 in
any suitable manner. As an example, customer 14 may purchase goods
or services from merchant 22 at a store or other physical location
operated by merchant 22. As another example, customer 14 may
purchase goods from merchant 22 over the telephone, by mail, or
using the Internet or other suitable communications network, which
may be similar to communications network 18, and the purchased
goods may be subsequently shipped to customer 14.
If customer 14 purchases one or more goods or services from
merchant 22, merchant 22 may generate an electronic record of the
transaction and communicate the generated record to credit card
issuer 12. A transaction record may be generated in any suitable
manner, such as at a point-of-sale terminal or other device, and
may include any suitable transaction data. For example, a
transaction record may include data reflecting an account
identifier such as a credit card number, a credit account
identifier, a credit line identifier, or other suitable identifier,
data reflecting a transaction price, data identifying merchant 22,
data reflecting a transaction date, other suitable data, or any
combination of the preceding. Credit card issuer 12 may use the
communicated transaction record to update the credit account of
customer 14 for billing and possibly for other purposes.
Modifications, additions, or omissions may be made to system 20
without departing from the scope of the invention. For example,
system 20 may have more, fewer, or other modules. Moreover, the
operations of system 20 may be performed by more, fewer, or other
modules. Additionally, functions may be performed using any
suitable logic comprising software, hardware, other logic, or any
suitable combination of the preceding.
FIG. 3 illustrates an example of a credit card issuer 12. As
discussed above, credit card issuer 12 may include any entity
suitable to provide a customer 14 a credit account. The credit card
account may be associated with a loyalty program that offers
benefits in return for or "as compensation for" dedicated use of a
credit account. The credit account may allow customer 14 to make
purchases using credit associated with the credit account, and then
make payment towards the credit account.
Terms and conditions may be used to define the credit account
agreement between credit card issuer 12 and customer 14. The terms
and conditions may include, for example, due dates, a grace period,
payment requirements, usage requirements, benefits associated with
a loyalty program, a penalty, other requirements, or any
combination of the preceding. A due date refers to the date by
which a satisfactory payment is due from customer 14. The grace
period refers to a period of time after a due date during which
payment may be made without incurring a penalty. Payment
requirements describe requirements that need to be satisfied in
order for a payment from customer 14 to be considered satisfactory.
Usage requirements may include a requirement that the credit
account be dedicated for all or a substantial majority of the
customer's credit purchases. The benefits associated with a loyalty
program include any benefit that the customer may receive in return
for using the credit account according to the terms of dedicated
use of the loyalty program. The penalty may comprise compensation
that customer 14 is required to provide if the customer 14 does not
submit satisfactory payment before the end of the grace period.
According to one embodiment of the invention, customer 14 and
credit card issuer 12 may negotiate one or more of the terms and
conditions of the credit account.
Credit card issuer 12 may be used to manage dedicated use of a
credit account, which may be defined by the terms of a loyalty
program. The type of dedicated use of a credit account may be
described by a usage requirement, such as exclusive use or backup
use. Credit card issuer 12 may offer a customer participation in a
loyalty program that may bind the customer to a usage requirement
for which the customer may receive benefits. For example, a loyalty
program may require exclusive use of the credit account issued by
credit card issuer 12 so that all or a substantial majority of the
credit purchases made by customer are performed using the credit
account. In return for the exclusive use of the credit account, the
customer may receive benefits such as a lower interest rate, a
lower or waiver of minimum monthly payment, merchandise discounts
and/or offers, service discounts and/or offers, credit limit
privileges, credit insurance, cash, or any other suitable benefit.
According to one embodiment, credit card issuer 12 may offer the
benefits and also have the right to charge a penalty fee for
violation of the dedicated use requirement. The benefits may be of
such value and the penalty fee may be of such amount that the
customer would be encouraged to satisfy the dedicated use
requirement, and otherwise comply with the terms of the loyalty
program. Any other suitable encouragement may be used without
departing from the scope of the invention.
According to another embodiment, the loyalty program may also
include a backup credit account option where a customer may use an
alternate credit account if the primary credit account is not
available. For example, joint credit account customers, such as a
husband and wife, may each have a credit account, where the credit
accounts are associated with each other as joint credit accounts.
Each joint credit customer may use his/her credit account, the
primary credit account, as the exclusive use credit account, while
using the second of the two joint credit accounts as a backup card
if the primary credit account is not available. The backup credit
account option may be offered to the customer as part of the
loyalty program to allow joint credit customers to incur the
benefits associated with dedicated use of a credit account.
According to the illustrated embodiment, credit card issuer 12 may
include one or more operator terminals 30, a data management system
32, one or more function modules 34, and a database 36. The
components of credit card issuer 12 may be located at one or more
sites and may be coupled to each other using one or more links,
each of which may include, some or all of a computer bus, a public
switched telephone network (PSTN), a public or private data
network, the Internet, a wireline or wireless network, a local,
regional, or global communication network, an enterprise intranet,
other suitable communication link, or any combination of the
preceding.
An operator terminal 30 may provide an operator access to data
management system 32 to configure, manage, or otherwise interact
with data management system 32. An operator terminal 30 may include
a computer system. As used in this document, the term "computer"
refers to any suitable device operable to accept input, process the
input according to predefined rules, and produce output, for
example, a personal computer, workstation, network computer,
wireless data port, wireless telephone, personal digital assistant,
one or more processors within these or other devices, or any other
suitable processing device.
Data management system 32 may manage data associated with credit
accounts, which may in particular embodiments involve creating,
modifying, and deleting data files associated with credit accounts
automatically or in response to data received from one or more
operator terminals 30, function modules 34, or customers 14.
Additionally, data management system 32 may call one or more
function modules 34 to provide particular functionality according
to particular needs, as described more fully below. Data management
system 32 may include a data processing unit 38, a memory unit 40,
a network interface 42, and any other suitable component for
managing data associated with credit accounts. The components of
data management system 32 may be supported by one or more computer
systems at one or more sites. One or more components of data
management system 32 may be separate from other components of data
management system 32, and one or more suitable components of data
management system 32 may, where appropriate, be incorporated into
one or more other suitable components of data management system
32.
Data processing unit 38 may process data associated with credit
accounts, which may involve executing coded instructions that may
in particular embodiments be associated with one or more function
modules 34. Memory unit 40 may be coupled to data processing unit
38, and may comprise one or more suitable memory devices, such as
one or more random access memories (RAMs), read-only memories
(ROMs), dynamic random access memories (DRAMs), fast cycle random
access memories (FCRAMs), static random access memories (SRAMs),
field-programmable gate arrays (FPGAs), erasable programmable
read-only memories (EPROMs), electrically erasable programmable
read-only memories (EEPROMs), microcontrollers, or microprocessors.
Network interface 42 may provide an interface between data
management system 32 and communications network 18 such that data
management system 32 may communicate with customers 14, credit
bureaus 16, merchants 22, or any combination of the preceding.
A function module 34 may provide particular functionality
associated with handling credit accounts or handling transactions
in which payments are made using credit accounts. As an example
only and not by way of limitation, a function module 34 may provide
functionality associated with risk profiling, credit account
management, billing, or default management. Function module 34 may
be called by data management system 32 possibly as a result of data
received from an operator terminal 30 or a customer 14 via
communications network 18. In response, function module 34 may
provide the particular functionality associated with function
module 34 in order to communicate one or more results to data
processing unit 38 or one or more other suitable components of data
management system 32. The communicated results may be used to
create, modify, or delete one or more data files associated with
one or more credit accounts, provide data to an operator at
operator terminal 30 or to customer 14, or perform any other
suitable task.
Function modules 34 are operable to perform various functions in
the operation of credit account system 10. According to the
embodiment shown in FIG. 3, function modules 34 include an account
authorization module 52, a fee module 54, a billing statement
module 56, a default management module 58, and a benefit module 60.
Like data management system 32, function modules 34 may be
physically distributed such that each function module 34 or
multiple instances of each function module 34 may be located in a
different physical location geographically remote from each other,
from data management system 32, or both.
Account authorization module 52 may be operable to provide
customers 14 a credit account that is associated with a loyalty
program wherein customer 14 may receive benefits in return for
dedicated use of the credit account. The loyalty program may
include terms defining exclusive use and backup use of the credit
account. Credit card issuer 12 may offer customer 14 participation
in a loyalty program that may bind the customer to a usage
requirement for which the customer may receive benefits. For
example, a customer may accept to use exclusively the credit
account issued by credit card issuer 12 so that all or a
substantial majority of the credit purchases made by customer are
performed using the credit account.
A credit account may provide one or more credit lines such as one
or more revolving credit lines, one or more installment credit
lines, or any combination of the preceding. A revolving credit line
may comprise a short-term revolving credit line, such as a
one-month revolving credit line. According to a revolving credit
line, customer 14 may choose to pay the full amount of debt owed by
a due date or defer payment of at least a portion of the debt to a
later due date. Credit card issuer 12 typically charges customer 14
interest or finance charges for such deferred payments during the
period of deferral. An installment payment credit line may allow
customers 14 to pay for qualified purchases in a particular number
of installments over a particular number of installment periods by
specific due dates at a relatively low interest rate. For example,
the installment payment credit line may allow for payment of
qualified purchases in three installments over three one-month
installment periods.
A credit line may have a credit limit that may be established,
managed, or both based on a variety of information, including
information regarding customer 14, such as credit history
information received from one or more credit bureaus 16,
information received from customer 14, or an evaluation of the
payment performance of customer 14. The credit limit may be
established, managed, or both by account authorization module 52,
account upgrade module 62, as described below in greater detail, or
both.
Fee module 54 may be operable to charge customer 14 a monthly fee
in compensation for awarding the credit account to the customer.
Fee module 54 may be operable to award other suitable compensation
fees. Fee module 54 may be operable to charge fees in a variety of
ways. For example, fee module 54 may charge a periodic fee, such as
a monthly, semi-annual, or annual fee, for providing the extension.
The monthly fee may comprise other or additional manners of
compensation. As an example, customer 14 may incur an increased
interest rate associated with the credit account instead of
incurring a monthly fee.
Billing statement module 56 may be operable to generate billing
statements for particular billing periods, provide the billing
statements to customers 14, or both. In particular embodiments,
billing statement module 56 is operable to generate billing
statements that show the minimum payment owed by customer 14 and
the due date for the minimum payment. Due dates may be established
at any suitable interval of time, for example, monthly, bimonthly,
or weekly. The due dates may be defined according to any suitable
manner, for example, according to a certain date of the month such
as the first of the month, or according to a certain day of the
month, for example, the first Monday of the month.
Default management module 58 may be operable to apply a penalty to
customer 14 if customer 14 fails to make a satisfactory payment by
the appropriate date, such as a due date, the end of a grace
period, or other suitable date. Additionally, default management
module 58 may be operable to apply a penalty fee to customer 14 if
customer 14 fails to meet the terms of the loyalty program such as
by failing to use the credit account exclusively for credit
purchases. The terms and conditions of a credit account may specify
the due dates on which payments are due, and the grace period after
the due date during which a payment may be made without incurring a
penalty. The penalty fee may, however, be waived by the credit card
issuer 12 if customer 14 provides other compensation, such as
agreeing to pay a higher interest rate associated with the credit
account, or if the terms of the loyalty program do not include
incurring penalty fees for failure to meet the dedicated use terms
of the loyalty program.
The penalty may include, for example, a flat penalty fee, an
interest charge, or other suitable penalty. The flat penalty fee
may comprise a constant value, which may be defined in the terms
and conditions of the credit account. An interest charge may
comprise a penalty fee that is calculated according to a penalty
interest amount and the amount of payment. As a example, if the
amount of payment is X and the interest amount is Y, then the
penalty fee is XY. Performance evaluation module 60 may be operable
to evaluate the performance of customer 14 in making payments by
the appropriate date, for example, the due date, the termination of
the grace period, or any other suitable date.
Benefit module 60 may associate a benefit with a credit account of
customer 14 in accordance with the terms of the loyalty program.
According to one embodiment, benefit module 60 may associate a
benefit of many benefit options associated with the loyalty program
such that customer 14 may receive the benefit in return for
dedicated use of the credit account. The benefit may be provided
according to any suitable criteria. For example, benefit module 60
may determine a level of usage associated with the credit account
using the credit history, credit report, and/or other credit
information suitable for determining the level of usage that the
credit account may experience. Benefit module 60 may identify the
benefit to be provided according to the level of usage such that a
customer 14 with a high level of usage may be offered and provided
a high value benefit, while a customer 14 with a low level of usage
may be offered and provided a low value benefit. Any other suitable
criteria may be used to identify and provide a benefit to customer
14 without departing from the scope of the invention.
According to one embodiment, benefit module 60 includes a credit
activity monitor 62 that monitors the credit card activity of
customer 14 in order to identify if customer 14 is satisfying the
terms of the loyalty program. For example, credit card issuer 12
may monitor a credit report comprising credit information
associated with customer 14 in order to determine if customer 14 is
exclusively using the credit account issued by credit card issuer
12. According to another embodiment, credit activity monitor 62
monitors the level of usage of a primary credit account and
determines if a second joint account activity satisfies the terms
of dedicated use of the loyalty program associated with the joint
credit accounts. The credit report may be used by other function
modules 34 without departing from the scope of the invention.
Modifications, additions, or omissions may be made to credit card
issuer 12 without departing from the scope of the invention. For
example, credit card issuer 12 may have more, fewer, or other
modules. Moreover, the operations of credit card issuer 12 may be
performed by more, fewer, or other modules. Additionally, functions
may be performed using any suitable logic comprising software,
hardware, other logic, or any suitable combination of the
preceding.
FIG. 4 is a flowchart illustrating an example method for offering
an extension to a grace period for a credit account. The method
begins at step 100, where credit card issuer 12 provides a credit
account to customer 14. According to one embodiment, the credit
account may be provided by account authorization module 52 as was
described with reference to FIG. 3.
At step 102, dedicated use status is associated with the credit
account. Dedicated use status may comprise exclusivity use
requirement or backup option requirement as was described with
reference to FIG. 3. In one embodiment, customer 14 may accept an
offer to join a loyalty program where benefits may be incurred in
exchange for exclusive use of the credit account.
A benefit may be provided to a customer in response to the
dedicated use status at step 104. In one embodiment, a benefit may
be selected from any of the benefit options available from the
loyalty program and according to any suitable criteria. For
example, customer 14 may be provided benefits according to a
benefit value that is relative to the level of usage of the credit
account. According to one embodiment, benefit module 60 provides
the benefit.
At step 106, the credit activity associated with customer 14 may be
monitored. According to one embodiment, the credit activity monitor
62 monitors the credit activity of customer 14 by accessing a
credit report. The credit report may comprise information regarding
the level of usage of the credit account, whether the credit
account is being used exclusively, and/or whether a joint credit
account is being used as a backup card as required by the loyalty
program. In one embodiment, monitoring the credit may be performed
monthly, bimonthly, annually, or at any other recurring period
suitable for monitoring usage of the credit account. It will be
understood that by participating in the loyalty program, customer
14 may provide authorization for credit card issuer 12 to
periodically access credit information corresponding to customer
14.
A determination is made at step 108 as to whether the credit
activity satisfies the dedicated use terms of the loyalty program.
In one embodiment, the credit activity associated with customer 14
satisfies the dedicated use terms if the credit activity shows that
the credit account is used exclusively for credit purchases.
According to another embodiment, the credit activity may satisfy
the dedicated use terms if the credit account is a backup account
as was described with reference to FIG. 3.
If the credit activity does not satisfy the dedicated use terms,
the method proceeds to step 110, where the customer may be
penalized. In one embodiment, a penalty fee may be levied from
customer 14 for failure to meet the dedicated use terms of the
loyalty program. In another embodiment, credit card issuer 12 may
penalize customer 14 by reducing the benefits provided, suspending
the benefits until dedicated use of credit card resumes,
terminating the credit account, or disassociating the credit
account from the loyalty program. Customer 14 may be penalized in
any other suitable fashion without departing from the scope of the
invention.
If the credit activity satisfies the dedicated use terms at step
108, the method proceeds to step 112, where the benefits are
maintained. At step 114, it is determined if a next cycle needs to
be processed. According to one embodiment, a cycle may be a billing
cycle, a monitoring cycle, a cycle associated with the loyalty
program, or any other period of time suitable for managing a
loyalty program wherein dedicated use of the credit account is
monitored. If there is a next cycle to process, the method returns
to step 106, where the credit activity is monitored. If there is no
next cycle to process, the method terminates.
Modifications, additions, or omissions may be made to the method
without departing from the scope of the invention. For example, a
step may be added where credit card issuer 12 offers customer 14
participation in the loyalty program such that customer 14 incurs a
benefit in exchange for dedicated use of the credit account. As
another example, a step may be added where customer 14 accepts the
offer. As yet another example, maintaining the benefit at step 112
may be modified to include upgrading the level of benefit and/or
credit account terms if the credit activity shows a higher level of
usage than predicted. Additionally, steps may be performed in any
suitable order without departing from the scope of the invention.
For example, providing the benefit to customer 14 in response to
dedicated use status at step 104 may be performed after the
dedicated use credit activity has been monitored and
determined.
Although an embodiment of the invention and its advantages are
described in detail, a person skilled in the art could make various
alternations, additions, and omissions without departing from the
spirit and scope of the present invention as defined by the
appended claims.
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